Does money make us happier? This long-standing debate has been analyzed for decades, but recent research suggests the real key to happiness may not be how much you earn, but what your income allows you to do.
For years, researchers believed happiness plateaued once basic needs were met. After a certain income threshold, having more was thought to not really add to your emotional well-being. New findings, however, may reveal what role money does play.
When it Helps, and When It Doesn’t
A large study summarized by Wharton researchers tracked tens of thousands of working adults across more than 1.8 million real-time moments in daily life. The results showed earning more money can lead to more happiness, but only during certain parts of life.
Some of the key finding include:
- Higher income is linked to greater happiness during most non work activities.
- During the workday, higher earners are not significantly happier than lower earners.
- The emotional benefits of a higher income only seem to come into play outside of work and during leisure time.
In other words, earning a bigger paycheck may make you happier, but the actual work doesn’t move the joy needle that much. Instead, a higher income can improve happiness when it affords you the freedom to choose how you spend your free time. Researchers concluded that income boosts happiness because it increases autonomy, except at work, where choices are more limited. One exception found that the top 3% earners were found to happier inside and outside of work.
Why Autonomy Matters
The pursuit of happiness may also be easier to achieve in the land of free. New research from Aalto University in Finland, the happiest country in the world for the last eight years, found that people with greater freedom and control over their lives report higher levels of happiness.
The cross-cultural study using data from nearly 100,000 people across 66 countries suggests that autonomy is positively associated with greater life satisfaction all over the world — but more so in wealthier and more individualistic countries where people spend less time worrying about survival and more time exploring personal goals.
According to Aalto University psychology researcher and happiness expert Frank Martela, there are two views on autonomy:
“There’s a theory that autonomy is a universal human need, so it should be connected to well-being no matter the culture and individual preferences. Others have argued that autonomy is something especially valued in wealthy and individualist countries, while other needs are more important in other contexts. Our study basically shows that both are right.”
The Bottom Line
Together, these two studies may tell a consistent story: Money is a factor in happiness when it increases freedom, control, and personal choice. While you may not be able to buy more happiness, more money can afford you more freedom to get the most joy out of life.
